How much will it cost to clean up Lloyds Banking Group?

Direct comparisons between Lloyds and RBS are not straightforward: Lloyds inherited 80% of its impairment charges as a result of the rescue of HBOS, Royal Bank of Scotland’s losses were mostly homegrown

Royal Bank of Scotland has put the bill to clean up the bank at £38bn. So what about its fellow bailed out bank Lloyds Banking Group?

A quick analysis of the results published by Lloyds for the same period – from the start of 2009 to the end of September 2011 – produces a figure of £55bn.

This £55bn includes £45bn of impairment charges (from loans which are not repaid on time): £24bn in 2009, £13bn in 2010 and £7.4bn in the nine months to 2011.

A £3.2bn provision for payment protection insurance, £3.6bn of integration costs and a £2.5bn fee for exiting the asset protection scheme push the bill to £55bn.

Direct comparisons between the two banks are not straightforward. Lloyds inherited 80% of its impairment charges as a result of the rescue of HBOS during the 2009 banking crisis. RBS’s losses were mostly homegrown with some inherited from the acquisition of ABN Amro at the height of the credit crunch in 2007.

The £38bn of RBS costs includes £28bn of impairment charges, the near-£1bn provision for mis-sold payment protection insurance, and £2.9bn of restructuring charges as well as credit writedowns caused by the 2007 credit crunch.

As a quick reminder, taxpayers put £45bn into RBS and almost £20bn into Lloyds. That totals £65bn.